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If the thought of a free college education sounds like an impossibly
distant dream, new legislation in Michigan is looking to make
it a reality -- but with a catch.

According to the proposal, a ‘pay it forward’ paradigm would be
introduced through which students would have to pledge a fixed
percentage of their eventual earnings to a dedicated fund. This
fund would then continue to finance tuition for future students.

While 20 states are reportedly analyzing various versions of the
plan, the Michigan bill contains a pilot program that drills down
implementation.

University students would be required to give back 4 percent of
their post-collegiate income, while community college students
would have to give back 2 percent. The length of the arrangement
would be determined by how long a student is in school; for every
school year, the payback commitment is five years.

This means that a student who graduates from a four-year
university making $30,000 her first year would have to pay back
$1,200 (4 percent) that year. If her salary were to increase to
$40,000 the next year, she would then owe $1,600. Because she
spent four years in school, she would have to commit for 20
years.

(Knezek is the one who introduced the SMART Act -- which
stands for Smarter Michigan and Retaining Talent -- last month
alongside Representative Theresa Abed and Senator Jim
Ananich.)

In the event of unemployment or job loss, participants are not
required to contribute to the fund until they obtained
gainful employment that pays above the federal poverty level,
Knezek's office confirmed to Entrepreneur.com.

The bill calls for a testing group of 200 total students and also
sets aside $2 million to jumpstart the fund, which would
ultimately be supervised by the state Treasury Department.

In order to participate, students must maintain a high GPA, and
eligibility is capped at three years for community college
students and five years for university students.

Supporters of the bill note that, unlike student loans,
subsequent payments are interest free. And also that with a fixed
percentage across the board, payments will scale in accordance
with income.

Detractors point out that, given that payments are fixed by a
certain amount of time, graduates run the risk of repaying their
tuition many times over -- if they go on, for instance, to become
multi-millionaires. The program could dissolve if it becomes
ravaged by starving artists and avoided by -- for this very
reason -- future engineers, doctors and the like.

Tell Us: What do you think of the bill? Would a ‘pay
it forward’ model provide a welcome alternative to students
beleaguered by seismic loans? Or does it turn the prospect of
financial achievement into too much of a risk? Share your
thoughts in the comments below.